Following an agreement with ActionSA to support the 2025 Budget, ANC President Cyril Ramaphosa acknowledged the Treasury's challenges in finding alternatives to reverse the 0.5% Value Added Tax (VAT) increase.

The agreement between the ANC and ActionSA stipulates that the VAT increase will be scrapped within 30 days. It also includes inflation adjustments for personal income tax to prevent bracket creep.

Addressing the media after his visit to a Branch General Meeting in Chiawelo, Soweto, at the weekend, Ramaphosa stated that, according to the Treasury, finding viable solutions for the VAT hike has proven to be challenging.

“From the current examination, Treasury has said, having looked at various areas where they can look, it doesn’t seem to be so,” he said.

Under the agreement, ActionSA has called on the Parliamentary Finance Committee and the National Treasury to find alternate sources of funding by May 1, 2025, to make up the expected R13 billion deficit caused by the VAT hike.

In addition to stressing the significance of balancing the budget in a way that minimises the financial hardship on citizens stemming from the recent hike, Ramaphosa stated that the ANC is looking into every option to overcome the R28 billion budget imbalance.

“However, the proposal from various parties is being taken very seriously and that process will be engaged in for the next 30 days,” he said, adding that a report will be available thereafter.

The ANC and ActionSA’s agreement follows the Democratic Alliance's (DA) rejection of the budget, compelling the ANC to seek support from both parties within and outside the Government of National Unity (GNU).

ActionSA, UDM, BOSA, Al Jamah-ah, PAC, UAT, GOOD Party, and PA voted in favour of the budget.

Parliament narrowly passed the budget, with 192 MPs voting in favour of the budget, while 182 voted against it over the VAT increases.

Meanwhile, ActionSA’s Chief Whip, Athol Trollip, warned the ANC there will be consequences if they don't work on reversing the VAT hike.

kamogelo.moichela@iol.co.za

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